Why does Turkey think Trump's tariffs could be an advantage for the country's economy?!
Turkey was hit with a 10% base tariff in U.S. President Donald Trump's trade announcement last week, compared with higher tariffs on many other countries, raising the prospect that the world's 17th-largest economy could take advantage of the tariff regime. Finance Minister Mehmet Simsek said on Monday that the country's focus on domestic demand rather than exports would also mean a more limited impact on the economy.
" Turkey has free trade agreements with a total of 54 countries outside the US and the EU," he said, adding that "68% of our exports go to these countries ." Turkey has a customs union with the European Union that removes trade restrictions. Speaking on Friday, a day after Trump's announcement, Simsek said that " Turkey's relatively low tariff level could provide a comparative advantage in some sectors."
Can Selcuki, managing partner of Istanbul Economics Research, said the main negative effect on Turkey is likely to be through intermediate goods it supplies to countries or entities exporting to the US that are subject to higher rates, such as the EU, which is subject to a 20% tariff.
Turkish exports to the US were $16.7 billion (€15.2bn) in 2024, according to the Office of the US Trade Representative. It imports a similar level of goods and services from America. That level dwarfs exports to the EU, which President Recep Tayyip Erdogan said in January reached $108.7 billion (€99.2bn) last year.
" Any loss of competitive strength of EU products inevitably affects Turkey because Turkey exports intermediate goods to be incorporated into EU final products, " Selcuk said. "This is the most obvious negative." However, Turkey can use the new global trade environment to its advantage.
" A lot of manufacturing output will have to be relocated and the picture that Trump is painting is telling everyone to rethink their supply chains ," Selcuk added. " Turkey, with its strong manufacturing base and proximity to the EU, is in a unique position to leverage this realignment."
Sekib Avdagic, president of the Istanbul Chamber of Commerce, suggested that companies based in countries with higher tariff rates, such as China, could look to open factories in Turkey to export to the US at a lower rate. " Turkey's use of this opportunity will depend on its strategy to develop its export sectors and find new markets, " he told the state-run Anadolu News Agency.
Gurkan Yildirim, head of the Turkish Young Businessmen Association, added that "if Turkey provides a suitable investment environment, it can attract these companies' investments ." Selva Bahar Baziki, an economist at Bloomberg Economics in Ankara, noted that even taking into account indirect trade through third countries, less than 2% of Turkey's GDP was exposed to US demand. The industries most threatened would be those exporting metals and textiles.
Addressing the volatility surrounding the Turkish lira in recent years, which contributed to high inflation, Baziki added that the tariffs would produce "no inflationary pressure from exchange rate movements related to trade policies."
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